SIC 3083
LAMINATED PLASTICS PLATE, SHEET, AND PROFILE SHAPES



This category covers establishments primarily engaged in manufacturing laminated plastics plate, sheet, profiles, rods, and tubes. Establishments primarily engaged in manufacturing laminated flexible packaging are classified in industry group 267 (Converted Paper and Paperboard Products, Except Containers and Boxes).

NAICS Code(s)

326130 (Laminated Plastics Plate, Sheet, and Shape Manufacturing)

Industry Snapshot

This industry confronted the prospect of its own maturation in the late 1990s. Industry shipments fell from $3.19 billion in 1997 to $2.84 billion in 1998 and to $2.77 billion in 1999. Although they rebounded to $3.03 billion in 2000, shipments remained lower than those in 1997. As a result, companies began to devise inventive means of driving continued growth. Many companies hit upon the solution of increasing service as a way to promote growth. Specifically, companies such as GE Plastics of Pittsfield, Massachusetts, turned to product customization as a way of luring small-lot customers, especially those that utilized GE's just-in-time inventory system. Analysts predicted that the maturation of the industry would inevitably lead to consolidation, as with other industries.

Organization and Structure

In 1996 approximately 328 establishments were engaged in the production of laminated plastic plate and sheet. Those establishments employed 14,600 workers, 10,800 of whom were production workers. During 1994, the average value added per production worker was $105,925—a figure which compared less than favorably with an overall average of $134,084 for all U.S. manufacturing industries.

In terms of geographic concentration, the largest number of establishments was located in the East North Central region of the United States, followed by the Middle Atlantic region, and then the Pacific region, including Alaska and Hawaii. Alternatively, when ranked by the number of establishments per state, California was first with 44, followed by Ohio with 28, Illinois with 20, and Pennsylvania with 17. Ohio's establishments generated the most money from shipments, with $307.0 million.

Market concentration was relatively high in the laminated plastics plate and sheet industry. In 1992 it was estimated that the largest eight companies accounted for approximately two-thirds of the industry's $2.8 billion in sales. While three of the largest companies in the industry at that time were divisions of larger companies, most of the leading companies were subsidiaries. Only one company in the top 10, Spartech Corporation, was publicly traded.

The primary materials consumed by the laminated plastic plate and sheet industry, when ranked by delivered costs (not adjusted for inflation) were: materials, ingredients, containers, and supplies of various kinds, valued at $993.6 million in 1992; paper and paperboard products, except paperboard boxes, containers, and corrugated paperboard ($233.4 million); and other materials and components, parts, containers and supplies ($168.5 million).

The major sources of input for the plastics industry were overwhelmingly from the manufacturing sector, which accounted for nearly 63 percent of sector input. The single major input was plastic materials and resins, which comprised 36.2 percent. Wholesale trade accounted for 8.5 percent of inputs, while imports—undifferentiated by industry sector—contributed 5.8 percent.

If disaggregated by total product share, the industry's output was divided among the following product classes: thermosetting products were approximately 38 percent of total output in the early 1990s; thermoplastics were 29 percent; and other laminates were 28 percent. Plastic laminates (excluding flexible packaging), laminated plastics plate, and sheet and profile shapes accounted for the remaining 5 percent.

In the mid-1990s, the principal sectors responsible for the purchase of miscellaneous plastics products were hospitals, which bought 5.6 percent of sector output, followed by electronic components with 5.2 percent, and personal consumption with 4.3 percent. Exports made up 4.0 percent of total product sales.

Background and Development

Laminated plastic plate and sheet products are defined, in rather technical terms, as plastic materials consisting of superimposed layers of synthetic resin-impregnated or coated filler that have been bonded together by means of heat and pressure to form a single piece. Plastic sheet is distinguished from plastic film by its thickness—sheet is more than 0.010 of an inch in thickness. Sheet is known for its resistance to corrosion and is used in applications from building construction to production of appliances and other consumer durables. When discrete separate layers of plastics are joined together by an adhesive, heat, or other method, the finished product is called a laminate. The term "composite" is used to describe sheets that result when two or more plastics are combined.

The history of laminated plastics can perhaps be best understood in the context of the development of the plastics industry in general. Some have referred to the twentieth century as the "plastic century," when plastics technology applications were thought to be virtually limitless. In some respects this optimism was justified, as plastic in general began to make vast inroads as a lighter replacement for steel and other natural materials. With the boom in consumer spending following World War II, the idea of what some referred to as a "plastics utopia" was not all that farfetched. After the mid-1950s, laminated plastic was everywhere, with applications proliferating at an unprecedented rate.

One of the earliest and most famous names in laminated plastics history is Formica, the trade name developed by the Formica Corporation (Formica Laminate) over 80 years ago, spawning a vast array of products. It was during the 1950s that Formica took on its most characteristic use as kitchen countertops. Formica was sold as a durable nonporous material that required only the wipe of a damp cloth to clean the surface. Eventually, Formica surfaces would be able to imitate any type of surface.

Formica laminate was perfected by two former Westinghouse employees—Daniel J. O'Conor and Herbert A. Faber. They developed a process for making rigid laminated sheets that could be cut into various shapes. The Formica Insulation Company started in Cincinnati in 1913 as a venture of these two enterprising former Westinghouse employees. The new product was called "Formica" to distinguish it from other products such as Westinghouse's "Bakelite-Micarta," which had distinguished itself from the previous "Micarta." While early laminates were dark in color and homogeneous, it wasn't long before Formica's surface could hold any color, pattern, or texture including stone, wood, and textile. Other companies, such as Redmanol Company and Bakelite {founded by plastics pioneer Leo Baekeland), as well as smaller companies such as Continental Fibre and Diamond State Fibre, were all selling virtually the same product in the 1920s and 1930s. Sales of laminates boomed as laminate panels covered the interiors of railroad cars, decorative laminates covered the lobbies of many buildings, and Formica laminate even lined the Queen Mary ocean liner.

By the 1950s, technological change, lower resin prices, and new thermoplastic materials derived from petroleum led to a massive proliferation of laminates. Technological applications in the consumer appliance industry—including washing machines, vacuum cleaners, and refrigerators—all benefited from Formica parts. During this time, Formica took on its most characteristic use as kitchen countertops. Shortly afterward, the company was making dinette tops and chairs. Industry competition became fierce. By 1950 weekly production of Formica dinette sheets was 55,000 units, compared with just 28,000 units two years earlier.

In the 1950s the plastics industry expanded at an astounding rate that was far more rapid than most other American industries. Plastic laminate applications boomed as well, especially in consumer industries. In 1969 Formica ceased production of industrial grade laminate, one of its first applications. And in 1971 they received a patent for the development of a heavy-ink process used as another surface texturing technique. One year later a metallic laminate line was produced. In 1982, Formica laminate went three-dimensional by way of ColorCore, a surfacing material that made it possible to achieve volumetric as well as intaglio or cameo effects.

Establishments engaged in the manufacture of plastic plates, sheets, and related products shipped goods valued at $2.3 billion in 1993 (not adjusted for inflation). This figure remained in line with a generally flat trend in the industry in recent years. The total value of shipments increased by 5 percent from 1987 to 1990. The industry lagged behind the growth of plastics products in general, which experienced growth in shipments of over 17 percent during the same period. By 1996 the value of shipments increased to $2.6 billion.

The relatively flat trend in laminated plastic plate and sheet production has been attributed to several economic forces. Continuing weakness in the manufacturing sector due to the prolonged economic recession undoubtedly contributed to the stagnation in the demand for the industry's products during the late 1980s and early 1990s. On the positive side, however, laminated plastic makers have been able to maintain an advantage over competitors in nonplastic plate and sheet. In addition, research and development has resulted in better products and cheaper methods of production. Continuing advancements in processing technology are opening new markets throughout the world, most notably the recycling market.

Current Conditions

October 1999 saw price increases for acrylonitrile butadiene (ABS) resins, bolstering profits for companies in this industry. GE Plastics raised its price for Cycolac ABS by 7 cents per pound on October 11, followed by Dow Plastics on October 15. These companies and others that also raised prices explained the inflation as a result of the rising costs of raw materials as well as the tightening global market. Between 1999 and 2000, the cost of materials increased from $1.27 billion to $1.42 billion. The industry shipped $3.03 billion worth of products in 2000.

Industry Leaders

Of the companies that focused primarily on this industry (as opposed to Dow Chemical Co. of Midland, Michigan, which focused on multiple other industries besides just this one), the industry leader was GE Plastics of Pittsfield, Massachusetts, with 1998 sales of $6.7 billion. In early 1999, GE expanded capacity at its Ottawa, Illinois, facility by 80 to 100 million pounds, and added compounding capacity to its St. Louis plant. GE also expanded overseas, adding 300 million pounds of capacity to its polycarbonate facility in Cartegena, Spain.

Premark International Inc. of Deerfield, Illinois, generated 1998 sales of $2.7 billion. Spartech Corp. of Clayton, Missouri, garnered $653.9 million in sales for its 1998 fiscal year. Fiscal 1999 sales of $767.9 million represented the company's eighth consecutive year of record sales; late that year, the company acquired High Performance Plastics, Inc., formerly a subsidiary of Uniroyal Technology Corporation. Other industry leaders included Klochner Capital Corp. of Gordonsville, Virginia, with $546.0 million in fiscal 1998 sales, and Wilsonart International Inc., with $370.0 million in 1997 sales.

Workforce

In 2000, employment increased slightly from the previous year to 15,916 workers, including 12,017 production workers. Employment in the industry had declined since 1997, when employment totaled 16,517; of that total 12,898 were production workers. Production workers in 2000 earned an average wage of $15.16 per hour, compared to a wage of $13.55 per hour in 1997.

Employment figures from earlier in the decade show that the industry tends to follow a cyclical pattern. Total employment remained relatively flat between 1987 and 1990. It was 17,300 in 1987, rose 8 percent to around 18,600 in 1988, then dropped to 17,600 in 1990, for an overall increase of only 2 percent for the entire period. Production worker employment followed roughly the same trend, rising from 12,900 in 1987 to 14,000 in 1988, and falling to only 13,400 for an overall increase of 4 percent over the entire period.

Research and Technology

U.S. producers were continually developing new products and processes. This effort was reflected during the early and mid-1990s through the computerization of nearly all aspects of the laminated plastics production cycle, including design, manufacture, and distribution. Specifically, this has meant increased applications of computer-aided design and computer-aided manufacturing. At the sales level, these innovations include individualized customer design, which will lead to shorter delivery times and better quality control. By allowing manufacturers to determine precise product demand, these new methods of production and delivery will allow users of these techniques to achieve quick delivery and short turnover times.

Of course, all of these innovations, while increasing productivity and reducing unit costs, involve major investments in computer-automated machinery. As a result, firms have tried to reduce relative labor costs, which remain high when compared to other plastics industry groups. With their economies of scale and access to internally generated funds, the larger companies will be better positioned to implement these expensive, large capital commitment operations. This will undoubtedly lead to a pattern of technological change that is anything but uniform across firms in the industry.

Finally, most firms in the industry recognized the trend toward recycling and are devoting considerable research efforts to developing recyclable materials and technologies that hold potentially profitable applications.

Further Reading

Darnay, Arsen J., ed. Manufacturing USA. 5th ed. Farmington Hills, MI: Gale Group, 1996.

Infotrac Company Profiles. Available at http://web4.infotrac.galegroup.com .

Ouellette, Jennifer. "ABS Producers Mulling Price Increases." Chemical Market Reporter, 22 November 1999.

"Spartech Corporation Announces Agreement to Purchase Uniroyal Technology's High Performance Plastics Group." PR Newswire, 27 December 1999.

Tullo, Alex. "Engineering Plastics Market Grows in Wake of Innovative Strategies." Chemical Market Reporter, 20 September 1999.

United States Census Bureau. 1995 Annual Survey of Manufactures. Washington: GPO, 1997.

——. 1994 County Business Patterns Washington: GPO, 1996.

——. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .



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